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Excess Returns
Hosted by Excess Returns · EN
Excess Returns is dedicated to making you a better long-term investor and making complex investing topics understandable. Join Jack Forehand, Justin Carbonneau and Matt Zeigler as they sit down with some of the most interesting names in finance to discuss topics like macroeconomics, value investing, factor investing, and more. Subscribe to learn along with us.
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The AI Trade, the Fed and the Next Phase of the Bull Market | Warren Pies
Yesterday00:55:30Summary readyWarren Pies of 3Fourteen Research joins Excess Returns to break down the AI bull market, the macro risks investors should watch, and why the data still supports continued strength in semiconductors and equities. We discuss GPU demand, token usage, open source AI, Fed policy, housing weakness, oil, earnings growth, market valuations and the biggest risks to the current cycle.Warren Pies on Xhttps://x.com/WarrenPies3Fourteen Researchhttps://www.3fourteenresearch.com/Calibanhttps://www.3fourteenresearch.com/calibanMain topics coveredWhich bearish AI arguments actually matter for investorsWhy regulatory risk may be the biggest long-term AI concernHow data center spending is crowding out housing investmentWhy the Fed may struggle to cool AI-driven investment without hurting the labor marketWhat GPU availability says about real-time AI compute demandWhy open source AI is not yet replacing frontier modelsHow token pricing and OpenRouter data help measure AI usageWhy semiconductor stocks may still be in the middle of a major cycleHow semis are being valued differently than traditional cyclicalsWhy Fed policy, earnings growth and market multiples are key to the second half of 2026What oil positioning and refined product inventories say about macro riskWhy 3Fourteen remains constructive on equities despite rising overheating riskTimestamps00:00 Intro01:04 Which bearish AI arguments have teeth?04:00 Why AI regulation is the biggest long-term risk07:03 Technology spending versus housing investment11:03 How AI CapEx is showing up in inflation data13:04 Why the labor market is more fragile than headline jobs data suggests16:24 Why GPU availability is a cleaner signal than CapEx announcements21:00 What token pricing and OpenRouter data reveal about AI demand27:36 How 3Fourteen benchmarks frontier models against open source AI30:00 Why the semiconductor selloff looked like a buyable dip34:02 Are semiconductors still cyclical businesses?38:08 Why Fed tightening could be the thing that ends the bull market42:15 What the oil shock means now45:47 Refined product inventories, crack spreads and energy stocks47:18 Are earnings estimates becoming too optimistic?50:49 Why the debasement regime still supports equities54:05 Where to find Warren Pies and 3Fourteen Research
SummaryHe Wrote the Book on Why Moats Fail | Ritavan on What Actually Compounds Instead
2d ago01:11:59Summary readyRitavan joins Excess Returns to explain The System Gambit, a new framework for understanding competitive advantage, business strategy, AI disruption and long-term compounding. We discuss why traditional moat checklists can miss the real source of value, how companies can build systems competitors cannot copy, and what investors should look for when AI changes the game.The System Gambithttps://amzn.to/4b0J32IMain topics coveredWhy the traditional moat checklist can fail investorsThe three requirements for a true System GambitHow investors can evaluate business strategy from the outsideWhy code is not always the moat in the age of AIWhat history can teach investors about asymmetry and leverageWhy AI adoption is not the same as AI value creationThe difference between moving fast and understanding the gameLessons from Nokia, ASML, Amazon and WalmartHow intangible investment and J curves can hide long-term valueWhy the best companies build compounding systems competitors cannot copyHow investors can identify companies changing the game rather than optimizing the old oneTimestamps00:00 Opening preview and introduction04:00 The three ingredients of a System Gambit08:49 Why code is not the moat in AI software13:00 Skanderbeg and changing the rules of the game17:00 Good moats, good narratives and asymmetric advantage22:31 Microscope vs telescope as a lesson for AI28:35 AI winners, losers and high dispersion markets32:08 Signal quality, bottlenecks and why AI adoption is not enough36:00 Nokia, agility and the failure to build a causal model40:15 Why understanding the game beats speed44:00 Intangible investment, the J curve and ASML's hidden edge49:54 The contrarian AI thesis behind The System Gambit54:00 How to recognize a real System Gambit58:27 Amazon, Walmart and multi-paradigm compounding1:03:00 Prime, FBA and platform leverage1:07:00 Walmart's answer to Amazon1:11:06 Closing thoughts and where to find Ritavan
SummaryThe 100 Year Thinkers: Chris Mayer on SpaceX, AI Reckoning, and Why Early Is Overrated
5d ago00:58:26Summary readyOn this episode of the 100 Year Thinkers, Chris Mayer and Matt Zeigler discuss long-term investing, 100-baggers, AI stocks, SpaceX valuation, founder-led companies, and why the best investments often come with brutal drawdowns. We also cover his new book The Investor's Odyssey, the danger of letting labels like AI do too much work, how to think about TAM and capital allocation, and why patience may be the biggest edge for investors trying to own great businesses for decades.Subscribe to the 100 Year Thinkers on SpotifySubscribe to the 100 Year Thinkers on AppleThe Investor's Odyssey: Resisting the Sirens and Playing the Long Gamehttps://amzn.to/44BMXeJMain topics coveredWhy SpaceX, AI and trillion-dollar IPOs are testing investor disciplineHow Chris Mayer thinks about valuation after watching Google become a huge winnerWhy great businesses can still be terrible investments at the wrong priceThe danger of letting labels like AI, quality and TAM replace real analysisWhy many AI features may not create real customer valueWhat the dot-com bubble can teach investors about AI adoption and shakeoutsWhy investors do not need to be early if a company is truly exceptionalHow to separate AI anecdotes from real financial impactWhy capital allocation and return on invested capital matter more as companies scaleHow to evaluate founder control, governance, incentives and trustWhy the best long-term stocks can still fall 50 percent or more along the wayWhat rational exuberance might look like for long-term investorsTimestamps00:00 Intro: Chris Mayer on AI, SpaceX and long-term investing04:00 SpaceX valuation vs Google and the risk of paying too much08:01 Why labels like AI and quality can do too much work12:05 The AI pause, the dot-com analogy and where real value may emerge16:06 Why investors do not need to be early when a business is real21:00 Becoming a great company versus already being mature25:10 Thinking about TAM, market share and realistic growth expectations29:43 Corporate governance, free float and shareholder rights34:27 How to judge founder trust, incentives and compensation38:57 Employee ownership, culture and building enduring companies43:02 Investor frustration in a lopsided AI-driven market47:02 Why even a perfect stock picker would face brutal drawdowns52:17 The rise of trillion-dollar IPOs and the question of rational exuberance56:29 The Investor's Odyssey and playing the long game
SummaryWe Asked GMO’s Head of Asset Allocation Why This Bubble is Easy — But Investors Will Get it Wrong
1w ago01:09:01Summary readyBen Inker of GMO joins Excess Returns to break down whether the AI boom is an investment bubble, how it compares to 2000, 2007 and 2021, and why today’s risk may be more about earnings than valuations. We also discuss AI capital spending, market supply from IPOs, GMO’s seven-year asset class forecasts, international stocks, benchmark-free allocation and what private equity investors may be missing.7 YEAR ASSET CLASS FORECASThttps://www.gmo.com/americas/research-library/gmo-7-year-asset-class-forecast-may-2026_gmo7yearassetclassforecast/WHAT BARBARIANS LIKE TO TAKE PRIVATEhttps://www.gmo.com/americas/research-library/part-1-what-barbarians-like-to-take-private_gmoquarterlyletter/THE CASE FOR LIQUID ALTERNATIVEShttps://www.gmo.com/americas/research-library/the-case-for-liquid-alternatives-in-todays-environment_insights/Main topics coveredWhy GMO sees the AI boom as a bubble investors may be able to navigateThe difference between easy bubbles and hard bubbles in portfolio constructionLessons from the internet bubble, the global financial crisis and the 2021 duration bubbleWhy today’s market may be an earnings bubble, not just a valuation bubbleHow AI data center spending affects corporate profits before depreciation shows upWhy transformational technologies do not always reward the companies building themThe risk of circular financing, debt-funded AI spending and increasingly creative deal structuresHow IPOs, share issuance and market supply can pressure stock returnsGMO’s seven-year asset class forecasts and why international stocks look more attractive than U.S. stocksWhy private equity portfolios may contain large hidden bets on small, lower-quality companiesTimestamps00:00 AI, earnings bubbles and market supply00:58 Why Ben Inker thinks the AI bubble may be easier to navigate02:43 What makes a bubble easy or hard for investors08:12 Comparing risk and return in 2000, 2007, 2021 and today14:42 Why optimizers and real clients see risk differently17:02 What GMO learned from managing through past bubbles19:08 How today compares to the 2000 internet bubble20:00 Why this may be an earnings bubble23:34 Semiconductors, memory makers and the capital cycle25:00 How AI CapEx compares to railroads, electricity and fiber optics29:33 Debt, circular financing and strange AI deals34:32 Why massive stock issuance could challenge the market40:00 How GMO builds seven-year asset class return forecasts41:40 Why interest rates change fair value for stocks and bonds45:32 Why international, value and small-cap stocks look more attractive49:06 The case for a benchmark-free portfolio55:21 What 700 leveraged buyouts reveal about private equity01:02:00 How public portfolios can offset private equity risks01:03:37 Why investors need to understand what they are paid for01:08:27 Closing thoughts
SummaryFinding Quality Growth in Emerging Markets with Ian Smith
2w ago00:57:53Summary readyIan Smith, portfolio manager at William Blair, joins Excess Returns to break down emerging markets, global diversification, and why EM may offer a very different opportunity set than US stocks. We discuss AI capex, the role of Korea, Taiwan, China and India, the impact of the dollar, quality investing, valuation, and how active investors can think about opportunity in a world shaped by AI disruption and geopolitical change.William Blair Investment Managementhttps://im.williamblair.com/The Problem With Qualityhttps://im.williamblair.com/insights/articles/the-problem-with-qualityTopics covered:Why emerging markets are not one single tradeHow AI capex is reshaping EM indexes and performanceWhy Korea, Taiwan and China are central to the AI supply chainThe role of the US dollar in emerging market returnsWhy EM index concentration is higher than many investors realizeWhat past innovation cycles can teach us about the AI buildoutHow AI is changing the definition of quality investingWhy China’s manufacturing strength creates both opportunity and riskThe long-term case for India despite high valuationsHow William Blair evaluates quality, trajectory and underappreciationWhy valuation in emerging markets requires more than simple multiplesThe one investing lesson Ian Smith would teach the average investorTimestamps:00:00 Intro04:10 Why emerging markets are not one market08:37 Why EM is underrepresented in global indexes13:16 How the dollar impacts emerging market returns18:37 AI capex, picks and shovels, and EM supply chains24:17 How William Blair is using AI in the investment process28:30 Why quality and growth have decoupled in emerging markets33:19 Why AI disruption creates opportunity for active managers37:30 China’s overcapacity, competition and global manufacturing edge42:00 India’s long-term growth drivers and valuation challenge47:00 Finding underappreciated quality in EM stocks52:01 Deglobalization, China and the future of global trade56:09 The one lesson Ian Smith would teach investors
SummaryThe $2 Trillion Question | Tobias Carlisle on SpaceX, the AI Buildout, and the Rotation No One Sees
2w ago00:58:18Summary readyTobias Carlisle joins Excess Returns to discuss why today’s market may be setting up a major opportunity in value stocks, small caps and micro caps. We cover stretched market valuations, AI capex, SpaceX and other massive IPOs, the risk of speculative growth assumptions, and how Tobias builds systematic deep value portfolios in ZIG and DEEP.Tobias Carlisle on Xhttps://x.com/GreenbackdAcquirers Fundshttps://acquirersfunds.com/Topics covered:Why elevated market valuations point to lower forward returns, not necessarily an immediate exit from stocksThe case for small value, micro-cap value and mid-cap value after a long large-cap growth cycleWhy equal-weight indexes and small caps may be signaling a market leadership shiftWhether AI capex will create lasting profits or mostly benefit consumersThe parallels and differences between AI, the dot-com boom, railroads and fiber optic buildoutsHow AI spending is being financed and why the stock market may be demanding more compute investmentWhat the SpaceX IPO, OpenAI and Anthropic could mean for market supply and investor psychologyWhy base rates are being challenged by the growth of major technology platformsHow disruption can create value traps and why traditional valuation metrics can struggle in disrupted industriesThe energy demand implications of AI data centers and why nuclear and natural gas could matterHow Tobias combines valuation, quality, financial statements and portfolio construction in ZIG and DEEPWhy quarterly rebalancing may be a practical balance between timing luck, momentum and trading costsTimestamps:00:00 Why AI value may accrue to consumers04:00 What extreme market valuations say about future returns08:22 Small caps, equal weight and the Mag Seven reversal14:15 AI capex and lessons from past technology booms19:47 Who gets the profits from AI?23:00 Cash flow, debt and the AI spending race28:06 SpaceX, giant IPOs and market supply31:00 OpenAI, Anthropic and Mauboussin’s base rates35:17 Is buying the S&P 500 more speculative than investors realize?36:57 Value investing during disruptive technology cycles41:07 War, energy prices and the broadening trade45:32 Semiconductor valuations and aggressive growth assumptions47:30 How Tobias builds the ZIG and DEEP portfolios54:17 ETF rebalancing, timing luck and systematic value investing
SummaryThe Trillion Dollar Gap | Aswath Damodaran on SpaceX, AI and the Big Market Delusion
2w ago01:08:58Summary readyProfessor Aswath Damodaran joins Kai Wu on The Intangible Economy to break down how to value SpaceX, AI companies, intangible assets, and the future of value investing.We discuss why big markets do not automatically create big value, how AI CapEx is changing the character of major technology companies, and why the best investment stories still have to connect to the numbers.Subscribe on SpotifySubscribe on AppleTopics covered:Valuing SpaceX after its IPO and why price matters even for great companiesHow Starlink, space launch, and xAI fit into SpaceX’s valuation storyWhy total addressable market can mislead investors in AI and other disruptive industriesThe problem with AI unit economics, data centers, power, water, and reinvestment needsWhy growth can destroy value when margins and returns on capital are weakHow intangible assets, R&D, future growth, and narratives should show up in valuationThe Big Market Delusion and how overconfidence drives boom and bust cyclesWhy AI CapEx is different from the dot-com boom and could create broader risksHow AI is changing the character of the Magnificent Seven and semiconductor companiesWhy value investing became rigid, ritualistic, and righteous, and how it can evolveTimestamps:00:00 Why great companies can still be bad investments01:03 Introducing Aswath Damodaran and The Intangible Economy01:49 SpaceX IPO, Starlink, xAI, and the challenge of valuing uncertainty05:31 Why Starlink became the core of SpaceX’s current revenue10:31 How Damodaran valued SpaceX across launch, connectivity, and AI14:07 Why AI’s huge market may still have difficult unit economics17:10 The tension between SpaceX competing in AI and renting data centers to competitors20:00 Why valuation should use distributions instead of false precision22:39 How stories and numbers work together in valuation26:45 Why investors confuse promises, potential, and businesses30:49 The Big Market Delusion and overconfidence in AI investing33:02 Why the AI CapEx boom is different from the dot-com bubble35:17 How AI infrastructure is changing the Magnificent Seven38:36 Nvidia, Micron, semiconductors, and the risk of peak cycle earnings41:00 Why the biggest AI market stories could be scary for society43:37 AI disruption, labor markets, and the speed of technological change46:30 Measuring which jobs and companies are most exposed to AI automation49:00 Why AI cost structure may look more like Spotify than software51:13 The unresolved business model questions for LLMs and AI agents52:29 Why traditional value investing lost its edge56:03 Passive investing, book value, and the blame game in value investing58:13 Why rigid value investing is vulnerable to AI disruption01:00:58 How value investing can adapt to intangible assets and uncertainty01:02:21 Why any company can be a good investment at the right price01:04:57 Why investing mistakes and track records are harder to judge than they look
SummaryAndy Constan on the SpaceX IPO, AI CapEx, and the End of the Buyback Tailwind
2w ago00:59:49Summary readyIn the third episode of First Principles with Andy Constan, Andy breaks down the changing structure of markets as the IPO window reopens, AI CapEx accelerates, and corporate buybacks shift toward new equity supply. We discuss what the SpaceX IPO says about capital markets, whether AI spending can create disinflationary growth, why the consumer is still holding up, and what could challenge the current market bubble.Follow First Principles on SpotifyFollow First Principles of Apple PodcastsTopics covered:Why IPOs are central to the purpose of public marketsHow Andy evaluates whether the SpaceX IPO workedWhy issuers may want IPOs to trade higher after pricingThe shift from stock buybacks to new equity issuanceWhy AI CapEx is changing the supply and demand for sharesHow hyperscaler spending is being funded through cash, bonds, and stockThe economic test for whether AI investment pays offDisinflationary productivity growth versus labor displacementWhy the current economy is still supported by consumptionThe role of wealth effects and consumer dissavingWhy falling oil prices may not eliminate inflation pressureWhat Andy is watching in Fed policy, tariffs, AI CapEx, and equity issuanceHow Kevin Warsh could approach rates, QT, and the Fed balance sheetTimestamps:00:00 Intro and key themes04:18 How Andy reads the SpaceX IPO08:27 Why underwriters and regulators want IPOs to work13:00 Why issuers may want IPOs to trade higher17:05 From stock buybacks to new equity supply21:06 The 600 to 700 billion dollar shift in share supply26:42 The economic test for AI tokens32:09 Can AI create disinflationary productivity growth?38:10 Is AI CapEx holding up the economy?41:00 Wealth effects, dissaving, and the consumer45:52 Oil prices, war, and inflation49:07 Jalen Brunson, incentives, and long-term value52:00 Fed policy, tariffs, and what matters this summer55:36 Kevin Warsh, QT, and the Fed balance sheet58:42 Closing thoughtsNo information on this podcast should be construed as investment advice. Securities discussed in the podcast may be holdings of the firms of the hosts or their clients.
SummaryThe SpaceX IPO Meets a Huge Options Expiration | Brent Kochuba on What Comes Next
3w ago01:08:14Summary readyIn this episode of The OPEX Effect, Jack Forehand and Brent Kochuba break down the market structure impact of the SpaceX IPO, options expiration, dealer gamma, volatility, and the next major setup for the S&P 500 and Nasdaq. They discuss why SpaceX may trade more on flows than fundamentals, how call buying could create a gamma squeeze, and why June OPEX, VIX expiration, FOMC, oil, Iran headlines, and index inclusion could all collide at once.Subscribe to the OPEX Effect on SpotifySubscribe to the OPEX Effect on Apple PodcastsTopics covered:Why SpaceX is a flows game at the start of tradingHow the SpaceX IPO could affect liquidity across mega cap tech stocksWhy fundamentals may not matter when index flows and forced buying dominateThe role of Nasdaq, Russell, and S&P 500 index decisions in SpaceX tradingHow options could create a gamma squeeze in SpaceXWhy dealer hedging flows can push stocks higher or lowerWhat June options expiration could mean for the S&P 500Why VIX expiration and FOMC create a key market windowHow Core1M signaled the recent volatility spasmWhy expensive calls, not put buying, drove the recent market stressThe key S&P 500 levels Brent is watching into OPEXHow oil, rates, inflation, and Fed policy could affect market volatilityWhy Nasdaq options pricing is diverging from the S&P 500How SpaceX index inclusion could widen the gap between Nasdaq and the S&PWhat would make Brent add protection or look for another short-term market correctionTimestamps:00:00 Opening clips and the SpaceX flow setup05:27 Elon Musk net worth after the SpaceX IPO07:13 SpaceX, liquidity, Mag Seven selling, and index demand12:48 Why SpaceX may trade on flows before fundamentals17:59 What options trading could change for SpaceX22:05 How call buying can create a gamma squeeze28:24 Why June OPEX matters more than a normal expiration33:55 VIX expiration, FOMC, and market path dependency37:20 The Core1M signal and the recent volatility spasm41:22 The S&P 500 gamma map and key risk levels46:25 Why expensive calls drove the market stress50:14 Oil, rates, inflation, and the Fed setup57:03 The JPMorgan collar and the 6900 to 7000 support zone58:32 Nasdaq versus S&P 500 after the SpaceX IPO01:03:14 Brent’s summary, SpaceX gamma squeeze risk, and the next market setup
SummaryMike Green on What Happens When Passive Flows Meet the Largest IPO in History
3w ago00:43:55Summary readyMike Green joins Excess Returns to explain why passive investing, index construction, SpaceX, AI IPOs and mega-cap concentration may be changing how the stock market actually works. We discuss how passive flows can affect prices, why AI earnings may be more circular than investors think, what could break the current market narrative, and why the economy feels much weaker for many households than the headline data suggests.Michael Green Twitterhttps://x.com/profplum99Simplify Asset Managementhttps://www.simplify.us/Topics covered:Why the SpaceX IPO has turned passive investing into a mainstream market structure debateHow index committees and passive flows can influence individual stocksWhy low float, Nasdaq demand and passive buying could create unusual IPO dynamicsHow new AI-related equity issuance could change the supply-demand balance in the stock marketThe research behind passive flows, market impact and cap-weight concentrationWhy Mike thinks passive buying explains more of mega-cap outperformance than AI fundamentalsThe circular financing risk in AI, including Nvidia, CoreWeave, Google and AnthropicWhy buy-the-dip flows, ETFs, CTAs and vol control funds matter for market directionHow headline economic data can miss household stress, second jobs and lost purchasing powerWhat Mike is watching to see whether the AI trade and market narrative are starting to breakWhy AI may be hugely valuable to consumers before it creates major business productivity gainsHow companies may eventually redesign business models around AI rather than simply automate tasksWhy SpaceX wealth creation could seed the next generation of competitorsHow inflation, gasoline prices, low savings and a K-shaped economy are affecting consumersTimestamps:00:00 Passive indices, AI profits and why this market feels different04:07 Why SpaceX changed the passive investing debate08:01 The research behind passive flows and market impact12:16 Why Mike thinks passive flows explain mega-cap strength16:18 ETF flows, buy-the-dip behavior and bubble dynamics20:28 Why economic data can miss household stress25:13 Bubble warnings, CAPE and what investors may be ignoring29:17 AI as a consumer advice engine versus a productivity revolution33:29 How businesses may redesign themselves around AI37:51 Why IPO wealth may create the next generation of competitors42:06 Mike Green’s upcoming book on passive investing and market structure
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